This morning, the Trenton Times runs an editorial taking the City of Trenton to task for the poor decisions in managing property lease for a site on Hermitage Avenue. Outgoing Mayor Doug Palmer signed a boneheaded agreement committing the City to take the property, site of a failed grocery store, in order to renovate it as a Municipal Court Facility. Upon taking office, the Current Indicted Occupant of Trenton’s Mayor’s Office thought the deal was bad for the city – a rare flash of good judgment for the IO – but rather than seek a negotiated solution, just stopped paying monthly rent – a more common response for this character. One major lawsuit later, and we are on the hook to pay out as much as $8.5 Million over most of the next twenty years.
I won’t review the entire editorial, but will excerpt this relevant section:
Careful analysis of the costs and legal problems of canceling the courthouse project apparently never took place because those calculations would have arrived at the conclusion that has now come to pass.
Unless another lessee comes along to take over the remaining years of the 20-year agreement that the city now is bound to honor, the city will remain on the hook for payments of up to $37,000 a month.
“Careful analysis of the costs and legal problems of canceling the courthouse project apparently never took place.” Yes, that sure does sound like Standard Operating Procedure for the City under the IO. Far too Standard, as we have seen so many times during the last two and one-half years. Over the last few weeks, we have seen another potential real estate deal unfold with the City involved, with yet another notable absence of careful analysis of costs, benefits, liabilities or any other impact to the City.
Of course I refer to the Glen Cairn Arms site on West State Street. The City proposes to sell the property to Thomas Edison State College (TESC), for little more than the cost to demolish the current structures, remediate environmental contamination, and make a one-time payment of $300,000.
City Council convenes on Thursday to give final approval via a Second Reading to an Ordinance that would authorize the sale. Over the weekend, I wrote about what a flawed document this Ordinance is. Namely, there is not one mention in the Ordinance to the $300,000 payment. Perhaps even worse is one clause by which Council authorizes the City and TESC to negotiate a “Disposition Agreement” that would contain all the terms and conditions of the overall deal; by the language of the Ordinance, Council would have no further review of the Disposition Agreement. Because of these flaws, I called for Council to vote down the Ordinance as it stands, and seek a better deal for the City.
There are a few new developments to report this morning. TESC President Dr. George Pruitt wrote a letter yesterday to Acting Housing and Economic Development JR Capasso and Members of City Council “to confirm the terms of the agreement” between the City and the College. This two-page letter does in fact refer to the $300,000 payment, committing the College to this amount as “a one-time additional payment of $300,000 to the City of Trenton to mitigate the City’s prospective loss of property tax revenues resulting from the College’s exemption from property taxes.”
This is a step forward. The College is now on the record as agreeing to a Payment in Lieu of Taxes (PILOT) for the site, recognizing its obligation to be a responsible neighbor in this City.
The letter also says “Following the Council’s approval of this Ordinance, the City and the College will negotiate and execute a Disposition Agreement that will include the terms and conditions governing the College’s acquisition and development of this ]property.” [Emphasis mine - KM]
Not So Good!
Dr. Pruitt and TESC reinforce the point I make in my last post, that if this version of the Ordinance is passed on Thursday, Council will have no further role or voice in this deal, leaving the same Administration that screwed up on Hermitage Avenue to make a deal with TESC.
I do not find that acceptable.
Look. Here’s an example of a real estate Disposition Agreement. It is an 18-page excerpt of a 61-page document. It is long, it is thorough and exhaustive. It requires careful writing after a lot of discussion between the parties, and careful reading to ensure it represents what both parties agree to.
The Agreement covers such crucial items as liability and insurance, environmental impact statements and filings, assignments of risk, conditions and rules binding not only the new owners but all successors, compliance with zoning and building regulations, construction hiring and supervision, resolving disputes should either party believe the other is violating the agreement, who pays for other offsite but related improvements (like any traffic flow changes that might be needed at the intersection of Calhoun and State to accommodate the new building!), and so on and so on. This sample agreement has 61 pages by itself. It’s important stuff. But we do not have this yet, and we are nowhere near to having one.
As Dr. Pruitt reminds us, we don’t have an Agreement yet. Dr. Pruitt reminds us that TESC and Trenton “will negotiate” all these things into an Agreement. In the future. Not now. And, per the language of the Ordinance, Council will have given up its authority to shape and approve that deal. And Council will have given up its authority to the same Mayor and Administration who have made several such bad deals before.
The Times reminds us this morning, about the Hermitage Avenue site, “Unless another lessee comes along to take over the remaining years of the 20-year agreement that the city now is bound to honor, the city will remain on the hook for payments of up to $37,000 a month. It adds up to more than Trenton would have paid if Mack had not interrupted the process, as Times Staff Writer Erin Duffy pointed out in her [February 2] story.
Do we trust him and his people now to properly handle an even bigger deal??? I don’t think so.
In his letter yesterday, Dr. Pruitt is taking a few constructive steps forward, but frankly these are steps that should have been taken weeks ago, not at the last minute in an attempt to shore up support for an incompletely-structured deal.
It has been a little under three weeks from the time this deal was announced to the point that Council is being asked to grant its final, blank-check approval. Can any responsible person believe that this has been long enough for Council, the public and even the Administration to do anything like the “careful analysis” that was so obviously NOT DONE for Hermitage Avenue?
Dr. Pruitt states in his letter that his school’s application needs to be submitted to the New Jersey Department of Higher Education between March 1 and March 25; I haven’t seen that deadline in any materials that I have seen so far about the funding program TESC is applying under, but I will accept his dates.
As much as the City would like to help TESC meet this deadline, that is no reason for the City of Trenton to take part in a process that is not necessarily to our benefit. We are rushing far too fast into a deal that is not being made to protect the best interests of Trenton’s citizens and taxpayers. This needs to slow down.
The Times this morning calls the empty Hermitage Avenue store “another monument to mismanagement.” If the current deal on the table is not voted down by Council on Thursday in favor of another one that can be more beneficial to Trenton on a long-term basis, we will have another.
How many more can we afford?